Syngenta and ChemChina deal to complete by summer, says chief
Chinese assure CEO Fyrwald financing in place to seal takeover and fund more growth
Syngenta chief executive Erik Fyrwald is confident the $43bn sale of the Swiss seed and chemical company to ChemChina will be completed by the summer, as he looks to “aggressively grow” the company in China.
US and European antitrust regulators will approve the Chinese offer to buy Syngenta in the next few weeks, said Mr Fyrwald, who will remain chief executive once the deal is complete.
He adds that he has been assured by the Chinese group that financing is in place to close the deal, maintain the company’s investment-grade credit rating and fund more growth.
“It’s nice to have a financial owner with capacity and commitment to the long term,” said the chief executive, who expects increased spending on internal investment as well as acquisitions with incremental investment primarily in China.
“There is a big opportunity in China,” he added. “We have an opportunity to bring our capabilities to help strengthen Chinese agriculture” using ChemChina’s domestic knowledge and funding to bring existing technologies to the market.
Mr Fyrwald also wants to boost new innovation in China and collaborate with local institutes to commercialise developments.
The Asia-Pacific region accounted for less than 15 per cent of Syngenta’s $12.8bn sales last year.
State-owned ChemChina’s cash offer for Syngenta in February last year was the largest outward-bound deal by a Chinese company and is part of Beijing’s desire to improve food security, reduce reliance on foreign seed makers and develop an agribusiness industry.
The deal is the second of a trio of mega mergers consolidating the global agribusiness giants.
Some farmers, consumer groups and politicians are concerned more concentration could increase prices or cut choice and innovation. The first deal, between Dow Chemical and Dupont, was approved by European regulators on Monday. The third, Bayer’s purchase of Monsanto, is in progress.
“Regulators are rightly concerned” that there needs to be price competition and enough competitors innovating to ensure science keeps advancing, said Mr Fyrwald.
“If two of the top five players come out of the market, I think that changes things,” he said, adding what regulators require companies to sell to obtain antitrust approval — so-called “remedies” — are important in determining the future of the industry.
Dow and Dupont promised Brussels they would sell off half of Dupont’s crop protection business and some of Dow’s petrochemical divisions to address these remedies and concerns of regulators.
Syngenta “are absolutely looking at remedies”, said Mr Fyrwald who wants “bolt-on” acquisitions that fill in gaps — seeds assets are “high on the list”.
Syngenta earns 8 per cent of revenues from genetically modified products — seeds that combine traits from different plants or organisms to modify their behaviour.
Proponents argue GM traits increase yields and decrease carbon emissions and water usage, but critics worry about health impacts, environmental risks or unintended consequences.
GM products are largely banned in the EU, but are an important part of Syngenta’s business in the US, Canada, Brazil and parts of Asia.
Concern about GM has grown in China, but the government is “moving carefully” to build consumer confidence, according to Mr Fyrwald, and “to the extent that [GM] technology can reduce greenhouse gas emissions and reduce water consumption, that’s highly valued by China”.